Silicon Valley's Next Bust

I read an article in the WSJ about a month ago about how Silicon Valleny should be able to withstand the next bust period. Apparently in the last bust between 2001 and 2005, one in five (or 20%) of people in the valley lost their jobs. That's a lot. Things have been picking up lately (the traffic keeps getting worse) and a bust period is likely in the next few years. Apparently this time, though, it shouldn't be as bad as last time. A couple reasons the articles sites for that:

Start-ups are running leaner these days: It's cheaper to operate web start-ups because of cheap technology, "open source" software, and offshoring.

Most companies aren't going public: A bunch of profitless Internet companies went public in the last bust, but they aren't this time around. So the common investor won't be affected.

The downside of that last point is that most companies aren't going public but instead holding out for an acquisition by a big player like Microsoft, Google, or Yahoo. The problem is that those companies can only make so many big purchases and there are a lot of options for them with tons of "me-too" types. That means a lot of those companies will go under.

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